Revenue By Market Segment

If you run a one-service business, i.e., only pump grease accounts or only rent portables to construction, breaking down revenue by market segment is not required. If not, then there are some real benefits in tracking sales by market segments. First, a look at some market segments:

Usually each customer fits into one category, though there are some exceptions such as residential for pumping and construction/repair to replace a blocked septage field at the same residence. The benefits of segmenting your sales by market segment is that each market can require different equipment, operations and marketing to maximize your profit. Residential accounts require extra pumping capacity because may home owners require same day service, while grease accounts can be scheduled so that the extra equipment is not needed. Understanding where your sales are coming from helps you determine where to invest your time and effort in growing your business and maximizing profit.

Now you have details of sales by market segment, it would be nice to know the profitability of each of the segments. In order to know how profitable a market segment is, you have to have to track the sales and expenses for each market segment. You can see that if you divide your sales into five categories, and your expenses into two groupings, fixed and non-fixed (or indirect and direct), it can take a significant amount of time and effort to track expenses.

Let’s look at the different ways you can look at your revenue and the business benefit of each.